LUXEMBOURG / Retail Q4 2022

Food & Beverage operators closed 26 deals over the year.

The Food & Beverage sector continues its expansion all across Europe as well as in Luxembourg with 26 deals recorded in 2022, namely thanks to Pitaya, Pokawa, KFC, Thanh’s, Shamrock or Kotonias opened.

Premium fashion brands are quite resilient in Luxembourg, namely with new leases from JOTT and Elisabetta Franchi in Q3 and Zadig & Voltaire in Q4 2022.

Food retailers also continue to expand and new brands enter this market, namely Grand Frais which opened 2 different supermarkets in 2022, the latest one being around 3,500 sq m in Wickrange.

Finally, the automotive sector is growing all across Europe. Luxembourg is not an exception with two major transactions in Q4, Bilia-Emond for 24,500 sq m in the Cloche d’Or and Renault for 4,000 sq m in Bertrange.

Prime rents expected to rise in the coming months.

Prime rental levels remained stable in Q4, after the upward movement observed in Q3 2022 in the High Streets and Out-of-Town segments

Inflation is pushing rental levels on the rise for existing leases and as a consequence of important rental increases, retailers could decide to move and sign new leases at market levels, sometimes in buildings offering better environmental performances (to benefit from energy savings).

They stand at 145 EUR/sq m/month (compared to 140 EUR in the beginning of the year) in the High Streets segment. According to our forecasts and despite turmoil, stability is expected to rise gradually as from 2024.

In the Shopping Centre segment, no changes were observed this year. Prime rents stand at 90 EUR / sq m / month and they are expected to increase to 92 EUR in 2023. They should continue to rise gradually the years onwards to reach close to 100 EUR / sq m/month by the end of 2025.

Out-of-Town retail prime rents also increased this quarter to reach 23 EUR/sq m/month (coming from 22 EUR previsou quarter). Prime rents are expected to rise gradually to reach 27 EUR/sq m/month by the end of 2025 as the pipeline is relatively limited and demand for these locations important, pushing the rental levels on the upward.